What does "Coordination of Benefits" relate to in insurance?

"Coordination of Benefits" refers to the procedure that determines the order in which multiple health insurance plans pay for a patient's medical expenses when the patient is covered by more than one plan. This is crucial in preventing overpayments and ensuring that the total payment does not exceed the actual healthcare costs.

When a person has more than one health insurance policy, one policy is designated as the primary payer, while the other is the secondary payer. The primary insurance handles the initial claim up to its coverage limits, and then the secondary insurance may cover additional costs, if applicable. This process helps manage the claims and ensures that payments are made efficiently and correctly.

The other options do not accurately reflect what Coordination of Benefits actually entails. For instance, ensuring policyowners receive dividends relates to profit-sharing among policyholders, which is irrelevant in the context of multiple insurance policies. Strategies for increasing coverage limits focus on enhancing individual policy benefits rather than managing multiple plans' payments. A payment plan for health services refers to how payments are structured for services received, rather than how insurance benefits from multiple plans are coordinated. Understanding the role of Coordination of Benefits is essential for anybody dealing with multiple insurance policies to ensure efficient claims processing.